9 April 2019

Mozambique: Hidden Debts - Former Central Bank Governor May Be Charged

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Maputo — The Mozambican Attorney General's Office (PGR) is likely to charge the former Governor of the Bank of Mozambique, Ernesto Gove, with abuse of office and membership of a criminal association, according to a report in Tuesday's issue of the independent newssheet "Carta de Mocambique".

The paper's sources say that Gove was questioned last Friday in connection with the scandal of Mozambique's "hidden debts" - the over two billion US dollars that three fraudulent companies, namely Proindicus, Ematum (Mozambique Tuna Company) and MAM (Mozambique Asset Management), obtained from the banks Credit Suisse and VTB of Russia in 2013 and 2014.

The PGR has charged 20 people in connection with this scandal but let it be known, a fortnight ago, that it is also opening four "autonomous cases", and in one of these Gove is believed to be a suspect.

Up until now the spotlight has largely been on the role of the then finance minister, Manuel Chang, currently under detention in South Africa, who signed most of the illicit loan guarantees. Without explicit Mozambican government guarantees, the two banks would never have lent such huge sums to previously unknown companies.

But the illicit loans also needed the go-ahead from the central bank, and it was Gove who allowed the three companies to contract the debts. According to the PGR charge sheet cited by "Carta de Mocambique", Gove issued at least four dispatches authorising Proindicus, Ematum and MAM to contract the loans.

According to this document, the Bank of Mozambique approved, on 14 March 2013, the loan agreement for 373 million dollars signed between Proindicus and Credit Suisse two weeks earlier. The approval was signed by a bank official, Silvina de Abreu (today the central bank's director of communications), but only after a dispatch from Gove.

The contract with Proindicus, according to the prosecutors, underwent two changes increasing the amount to be lent, first by 250 million dollars (on 14 June 2013), and by a further 278 million dollars (on 14 December 2014). This brought the total loan to 900 million dollars.

The first increase was approved by the Bank of Mozambique in a dispatch of 12 June 2013 after a request for a favourable opinion of the previous day which cited the "strategic nature" of Proindicus. The authorisation was again signed by Silvina de Abreu.

The prosecutors could find no central bank records concerning the second increase. Perhaps somebody had second thoughts since, in the end, the full loan to Proindicus was only 622 million dollars.

On 21 August 2013, the central bank, again through the signature of Silvina de Abreu, authorised the loans of 850 million dollars to Ematum - 500 million from Credit Suisse and 350 million from VTB. Abreu was carrying out instructions contained in dispatches from Gove.

On 20 May 2014, the central bank authorised a loan of 540 million dollars from VTB to MAM. While the previous requests for authorisation had come from the chairpersons of the companies, in this case Manuel Chang himself asked the Bank for authorisation.

Gove, said "Carta de Mocambique", signed his dispatches on the basis of "internal opinions" of the Bank.

Later Gove denied all knowledge of the matter. When the Proindicus and MAM loans finally became public knowledge in April 2016, Gove even claimed that he had never heard of Proindicus. He told the independent papers "Mediafax" and "O Pais" that he had no knowledge of such a debt.

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